Directorate of distance education

Cope with the Bullwhip Effect
➢ Centralizing demand information occurs when customer demand 
information is available to all members of the supply chain. This 
information can be used to better predict what products and volumes 
are needed and when they are needed such that manufacturers can 
better plan for production. However, even though centralizing 
demand information can reduce the 
bullwhip effect
, it will not 
eliminate it. Therefore, other methods are needed to cope with the 
bullwhip effect
.

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Notes
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Methods for Coping with the Bullwhip Effect: 
It include:
➢
Reducing uncertainty
. This can be accomplished by centralizing 
demand information.
➢
Reducing variability
. This can be accomplished by using a 
technique made popular by 
WalMart
and then 
Home Depot
called 
everyday low pricing
(EDLP). EDLP eliminates promotions as well 
as the shifts in demand that accompany them.
➢
Reducing lead time
. Order times can be reduced by using EDI 
(electronic data interchange).
➢
Strategic partnerships
. The use of strategic partnerships can 
change how information is shared and how inventory is managed 
within the supply chain. These will be discussed later.
➢ Dir
ect shipping
. This allows a firm to ship directly to customers 
rather than through retailers. This approach eliminates steps in the 
supply chain and reduces lead time. Reducing one or more steps in 
the supply chain is known as 
disintermediation
. Companies such as 
Dell
use this approach.
****

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Notes
224